Trump's health insurance order pushes association plans to drive down costs — for some

President Donald Trump has signed an executive order that aims to make lower-premium health care plans available to more Americans.
Time

President Trump talked about his tax reform plan at the Pennsylvania Air National Guard 193rd Special Operations Wing at the Harrisburg International Airport.(Photo: Jeremy Long, Lebanon Daily News via the USA TODAY NETWORK)

WASHINGTON — President Trump signed an executive order Thursday that he says will lower health insurance premiums by allowing more consumers to buy health insurance through association health plans across state lines.

The order could help to reach the millions of uninsured people who don't have access to employer plans, but also find Obamacare beyond reach because of its skyrocketing premiums and scattered availability. It would allow more small businesses to pool their resources into associations that would then use their purchasing power to buy group plans for their employees.

However, the move could also move them into less-regulated plans without the same minimum coverage requirements or consumer protections.

Trump's order also proposes a number of other policy changes that he says will fill the gaps left by Obamacare's exchange plans, which have no competition in one-third of U.S. counties. He wants regulators to expand the use of health reimbursement arrangements, or HSAs, and to allow short-term health plans to be offered for up to a year for people who are in between jobs, missed the enrollment deadline, or have few other insurance options.

"This is something that millions and millions of Americans will be signing up for. They’ll be very happy, and they’ll get great health care," Trump said as he signed the order in a White House ceremony with members of Congress, administration officials and small business owners.

None of the changes would take effect immediately, and would need new regulations from the Labor, Health and Treasury departments to take effect.

Those regulations will need to take into account public comments on the proposals. Brian Blase, a Trump adviser on health care policy, said that process would "provide the opportunity for broad participation by the American people."

The executive action follows a string of legislative defeats in Trump's crusade to have Congress repeal the Affordable Care Act, which set up a series of state health insurance exchanges known as Obamacare.

With premiums for those plans skyrocketing, Trump is turning to a variety of smaller fixes that he said would increase competition, increase choice, and increase access to high quality health insurance:

► Expand the availability of association health plans, or AHPs, to allow more employers to participate.

Those association health plans already exist, but federal rules limit them to employees of small businesses with a "commonality of interest." Trump will ask federal agencies to rewrite the rules to allow them to be larger and sell plans across state lines. And because those plans won't have the same minimum coverage requirements as Obamacare, the premiums may be cheaper.

► Lengthen the term of short-term limited duration insurance, or STLDIs, for up to one year. Currently, insurance companies can only offer these Obamacare replacement plans for three months at a time.

► Modify the regulations on health reimbursement arrangements, or HRAs, to allow employers to cover more out-of-pocket health care expenses outside of Obamacare plans. "The requirements to adopt an HRA today are complicated and involved," said David Kautter, an assistant Treasury secretary. Simplifying those regulations turn HRAs into a "useful tool in expanding the range of health care options available."

All of these devices would make Obamacare alternatives more available and attractive, which is why Obamacare supporters are concerned that they'll lead to the kind of bare-bones catastrophic policies the Affordable Care Act outlawed. If young, healthy consumers helping to subsidize older, sicker patients pull out of state exchanges, that will result in even higher premiums for the Obamacare plans.

"You’ll have one part of the market that’s offering garbage insurance at cut-rate prices and another part of the market that’s very vulnerable to a death spiral," said Eliot Fishman, senior director of health policy at Families USA, which supports the law.

House Minority Leader Nancy Pelosi, D-Calif., said she hadn't seen the finer points of the executive order. "But I do know it's a sabotage of the Affordable Care Act."

Like many of Trump's more ambitious executive orders, the health insurance directive is fuzzy on the details and instructs his administration to change the regulations "to the extent permitted by law and supported by sound policy."

The order gives agencies deadlines of 60 days to 120 days to "consider proposing regulations or revising guidance" on health plans. That means the new policy could yet run into legal roadblocks, although regulators are generally reluctant to defy the policy directives of the president unless it's expressly forbidden by law.

But even if the regulations are watered down in the rulemaking process, they could send shivers through the insurance markets.

"What's a shame is that the very signal that some regulatory action is going to come down the pike is going to make insurers very nervous," said Nicholas Bagley, a University of Michigan professor who studies health insurance law. "This executive order is going to be disruptive, even if it doesn't have any legal effect."

The order did stop short of asking the Labor Department to allow individuals to buy plans directly from associations, instead of through a qualifying employer. That would have dealt a "body blow to the exchange plans," he said.

Congress may still need to pass legislation to fully implement the kind of free market approach Trump is proposing. Sen. Rand Paul, R-Ky., has championed Trump's approach and said he was excited by the order — but recognizes its limitations.

"The agencies have to explore the issue, read the existing law, and they have to come up with an interpretation of the existing law," he said Wednesday in Kentucky. "I’d like to you to be able to join Costco and be one of 85 million people and have Costco negotiate with the insurance company."

Trump's order Thursday was the kind of Obama-style executive action he had once criticized as a candidate, when he called them "major power grabs of authority."

Trump has now signed 49 executive orders, beginning with his Inauguration Day order telling agencies to "minimize the unwarranted economic and regulatory burdens" of the Affordable Care Act. At this point in his presidency, Obama had signed 26 executive orders.

Like Obama, Trump said he's acting because Congress won't. And White House Chief of Staff John Kelly said Trump only waited until now to take action once it became clear Congress wouldn't.

"There was a sense that had the big bill passed, all of that would've been taken care of," Kelly told reporters Thursday. "So since the big bill didn't pass, and we probably won't have a health care bill until, say, the spring, this was a way to take care of as many Americans as he could legally, with an executive order."

And Andrew Bremberg, director of Trump's Domestic Policy Council, said it's just the first of many executive actions Trump will announce on health care in the coming months.

But Trump also said he still hasn't given up on legislation, ending his signing ceremony by declaring, "We're going to also pressure Congress very strongly to finish the repeal and the replace of Obamacare once and for all. We will have great healthcare in our country."

Then, after thanking the assembled supporters in the Roosevelt Room, Trump turned to leave without signing the order.